Asia Stocks Mixed; Euro Volatile on Italian Vote: Markets Wrap

Asian equities traded mixed at the start of the week as investors assessed the impact of American tariffs on the global economy and the euro fluctuated as vote counting began in the Italian election.

Japanese stocks declined with those in Sydney and were little changed in Hong Kong, Seoul and Shanghai. U.S. equity futures dropped. The S&P 500 Index staged a late rally on Friday as investors speculated that President Donald Trump’s tough tariff talk won’t translate into the most severe protectionist policies. The euro traded between gains and losses as Italian exit polls pointed to a hung parliament. It earlier strengthened on news from Germany that the Social Democrats backed a government coalition with Angela Merkel’s Christian Democrat-led bloc. The yen edged higher.

“The euro dollar has been in a $1.21 – $1.25 broad-based range over the past month, that range remains intact,” Tony Boyadjian, senior vice president for foreign exchange at Compass Global Markets in Sydney, told Bloomberg Television. “The polls indicate a hung parliament, it may take a little bit of time before we get this center-right coalition formed and until that time look for the euro to be bought on the dips.”

A combination of a more hawkish tone from the Federal Reserve and Trump’s proposed tariffs riled markets last week. As the initial panic over Trump’s trade talk eased, China said it will host U.S. officials for a new round of dialogue on trade issues. Long seen as a haven currency during times of turmoil, the yen is once again shaping up as a winner. Attention now turns to developments in politics in Europe and to jobs data due in the U.S. at the end of the week.

Elsewhere, China kept its 2018 growth target of around 6.5 percent. The target was released Monday ahead of Premier Li Keqiang’s report to the National People’s Congress gathering in Beijing. The economy expanded 6.9 percent last year, though economists forecast a moderation to 6.5 percent this year.